Tax rise hikes bills for businesses

MORE than 800,000 small firms will be worse off because of a rise in their tax rate, it emerged yesterday.

PUBLISHED: 00:00, Thu, Mar 22, 2007

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The new tax rate will sting small businesses

The small companies’ rate of corporation tax will go up from 19p in the pound to 22p by 2009.

According to the Brit­ish Chambers of Com­merce, more than 800,000 firms with annual profits below £300,000 will face a higher tax bill as a result of the Bud­get measures. Director-general David Frost said: “This Budget could be dam­aging for small and medium-sized business in the long term. This is a substantial rise and will hit those looking to grow their business.”

Chief executive of the Forum of Private Business Nick Goulding said: “The Chancellor has used smoke and mirrors to disguise the fact that there is nothing in this Budget to support small businesses. In fact, the resulting confusion created by some initiatives will serve only to increase the red-tape burden.”

Tax cuts for big business would do nothing to ease the burden for most of the private sector, he added.

Some of the pain of the increase will be offset by tax relief on capital spending of more than £50,000 on plant and machinery.